China has published for the first time a 'white paper' on its foreign aid programme. Unfortunately, year-wise or country-wise figures are not available but the aggregate figure of aid given from 1950 till 2009 is 256 billion yuan (approx. 39.2 billion dollars). This compares with US's foreign aid of 28.8 billion dollars in 2009 alone. Half of China's aid has gone to African countries while a third went to Asian countries. Forty percent of aid was given as outright grants and used for projects such as building hospitals, schools and low-cost housing. The rest is divided evenly between interest-free loans and concessionary, or low-interest, loans, which are almost on par with grants. Contrary to general impression, only 9 percent of concessionary loans went into oil and mining projects while two-thirds went into economic infrastructure development in the recipient countries. The figures should quieten criticism that China uses aid for prising open the natural resources and mineral wealth of the African countries.
An interesting portion of the white paper is as regards the evolution of the "fundamental principles" of China's aid policy over the years. What began as a modest "material assistance" programme for North Korea and Vietnam in 1950, soon expanded to cover Indonesia as well and by 1956 it began covering Africa. In 1964 China for the first time codified its eight principles of aid policy "the core content of which featured equality, mutual benefit and no strings attached." 1971 (amidst the cultural revolution) sees a big expansion with China providing "maximum assistance it could afford to other developing countries in their efforts to win national independence and to develop national economy, thus laying a solid foundation for its long-term friendly cooperation with developing countries."
The character of the aid programme transforms since the reform period began in 1978. "China's economic cooperation with other developing countries extended from economic aid to multi-form and mutually-beneficial cooperation. China adjusted the scale, arrangement, structure and sectors of its foreign aid in accordance with its actual conditions. It strengthened its foreign assistance to the least developed countries, paid more attention to the economic and long-term effects of aid projects, and provided aid in more diversified and flexible ways. To consolidate the achievements of existing productive projects, China conducted multi-form technical and managerial cooperation with recipient countries, such as managing aid projects on behalf of recipient countries, lease management and joint ventures."
With China's own shift from a planned economy to a "socialist market economy" by the turn of the 1990s, further changes come into the aid policy. In 1993 China set up Foreign Aid Fund for Joint Ventures and Cooperative Projects with parts of the interest-free loans repaid to China by developing countries. The fund was mainly used to support Chinese small and medium-sized enterprises to build joint ventures or conduct cooperation with the recipient countries in the production and operation spheres... Meanwhile, it attached greater importance to supporting the capacity building of recipient countries, and kept enlarging the scale of technical training. Officials from recipient countries receiving training in China became an important part in the cooperation of human resources development between China and those countries."
There has been a phenomenal growth in China's aid budget during the period since 2004, with annual average increase of around 30%. Aid continues to be primarily disbursed through bilateral channels, but the white paper claims, the "the scope of international aid for development is being gradually expanded." The overall thrust of the white paper is to underscore by implication that China provides an alternative to western donors who mostly render "tied" assistance which turn out to be project exports whereas China's aid goes to nourishing the developing world. Read the full text of the white paper released in Beijing on Thursday.